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Don't miss Eric von Hippel's Keynote Address, "Gaining Competitive Advantage by Leveraging User Innovation Communities"

When researchers say that innovation is being democratized, we mean that users of products and services—both firms and individual consumers—are increasingly able to innovate for themselves. User-centered innovation processes offer great advantages over the manufacturer-centric innovation development systems that have been the mainstay of commerce for hundreds of years. Users that innovate can develop exactly what they want, rather than relying on manufacturers to act as their (often very imperfect) agents. Moreover, individual users do not have to develop everything they need on their own: they can benefit from innovations developed and freely shared by others.

User-centered innovation processes are very different from the traditional, manufacturer-centric model, in which products and services are developed by manufacturers in a closed way, with the manufacturers using patents, copyrights, and other protections to prevent imitators from free riding on their innovation investments. In the manufacturer-centric model, a user’s only role is to have needs, which manufacturers then identify and fill by designing and producing new products. This traditional model does fit some fields and conditions. However, a growing body of empirical work shows that users are the first to develop many and perhaps most new industrial and consumer products. Further, there is good reason to believe that the importance of product and service development by users is increasing over time.

The trend toward democratization of innovation applies to information products such as software and also to physical products, and is being driven by two related technical trends: (1) the steadily improving design capabilities (innovation toolkits) that advances in computer hardware and software make possible for users; (2) the steadily improving ability of individual users to combine and coordinate their innovation-related efforts via new communication media such as the Internet.

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Don't miss Ely Dahan's Keynote Address, "Voice of the Customer Goes
Hi-Tech on the Web"

Imagine that you have a high-tech tool that knows you well, your likes and dislikes and their relative importance for you. It is capable of acting as your agent and can search the whole world for the products and services that fit your needs and wants perfectly – without sharing your personal information with anyone else. Since our needs and wants change, this tool would also be able to adapt to those changes over time. Such a tool for consumers is part of the future envisioned by Ely Dahan, assistant professor of marketing at UCLA Anderson School of Management.

In perhaps another step toward this future, Dr. Dahan’s current research features breakthrough techniques to help answer the most basic and most important of marketing questions: What do consumers want? Using new mathematical programming methods, Dr. Dahan and his colleagues, Olivier Toubia, Duncan Simester and John Hauser of MIT’s Sloan School, developed Web-based analyses that provide accurate measures of consumer preferences with far fewer questions than are required using existing methods. This work brings together most of the major threads of Dr. Dahan’s research interests, which include new product development, Internet-based market research, the economics of cost reduction and mass customization.

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Don't miss Tony Ulwick's Pre-Con Workshop, "What Customers Want: Using Outcome-Driven Innovation to Create Breakthrough New Products & Services"

For decades, companies have been gaining valuable knowledge by uncovering distinctions among their customers—and they have been using that knowledge in efforts to gain a competitive advantage. That process of segmentation has served a number of purposes. Corporate finance groups segment customers so the company can better track financial results. Sales executives segment markets so they can target customers more easily with advertising and marketing programs. Industry analysts segment markets so they can more easily explain industry trends and competitive movements.

Since the 1950s segmentation methods have gotten more and more sophisticated, so that today companies can segment their market or customers based on demographic characteristics (such as age, gender, or geographic location), psychographic characteristics (such as comfort with technology or level of risk aversion), purchase behavior, or by distinctions in roles or customers’ needs.

Unfortunately, with so many segmentation techniques floating around, it is easy to pick the wrong tool for the job, especially if you do not quite understand the job to begin with. That’s what happens when companies try to use segmentation for the purpose of innovation. When it comes to innovation, companies try to segment the market so they can find groups of customers with unique needs, but should that be their objective? Should they even be focused on needs?

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